Correlation Between Kalyani Investment and Nippon Life

Can any of the company-specific risk be diversified away by investing in both Kalyani Investment and Nippon Life at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kalyani Investment and Nippon Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kalyani Investment and Nippon Life India, you can compare the effects of market volatilities on Kalyani Investment and Nippon Life and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kalyani Investment with a short position of Nippon Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalyani Investment and Nippon Life.

Diversification Opportunities for Kalyani Investment and Nippon Life

0.97

Correlation Coefficient

Kalyani Investment  Nippon Life

Almost no diversification

The 3 months correlation between Kalyani and Nippon is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Investment and Nippon Life India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Life India and Kalyani Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kalyani Investment are associated (or correlated) with Nippon Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Life India has no effect on the direction of Kalyani Investment i.e., Kalyani Investment and Nippon Life go up and down completely randomly.

Pair Corralation between Kalyani Investment and Nippon Life

Assuming the 90 days trading horizon Kalyani Investment is expected to under-perform the Nippon Life. In addition to that, Kalyani Investment is 1.08 times more volatile than Nippon Life India. It trades about -0.17 of its total potential returns per unit of risk. Nippon Life India is currently generating about -0.11 per unit of volatility. If you would invest  74,080  in Nippon Life India on December 26, 2024 and sell it today you would lose (15,135) from holding Nippon Life India or give up 20.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Kalyani Investment  vs.  Nippon Life India

Kalyani Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kalyani Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nippon Life India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nippon Life India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kalyani Investment and Nippon Life

The main advantage of trading using opposite Kalyani Investment and Nippon Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalyani Investment position performs unexpectedly, Nippon Life can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nippon Life will offset losses from the drop in Nippon Life's long position.

The idea behind Kalyani Investment and Nippon Life India pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.